Reference no: EM132507371

Question 1. Which of the following cost should not be taken into consideration when making a decision?

a. Opportunity costs.

b. Sunk costs

c. Relevant costs.

d. Differential costs

Question 2. Which of the following is not relevant when considering whether or not to drop a product?

a. The contribution margin.

b. Qualitative factors.

c. The potential impact on demand for other products.

d. Allocated common costs.

Question 3. Opportunity costs are:

a. Never incremental costs.

b. Always incremental costs.

c. Sometimes sunk costs.

d. None of the above.

Question 4. The joint costs incurred in a joint product situation:

a. Are incurred before the split-off point.

b. Are incurred after the split-off point.

c. Should only be allocated based on physical attributes.

d. None of the above.

Question 5. A joint product's cost is $18, which includes $6 of allocated joint cost. If sales price is $16. In this case:

a. Profit will improve if the company discontinues production of the product.

b. The company should sell as few of the items as possible to minimize the loss on sales.

c. The data are misleading because the $6 allocated joint cost will be incurred even if the product is discontinued.

d. Both a and b are correct.